Saturday, September 29, 2012

Cyberwarfare is here. There have already been attacks, both domestic and foreign in origin where a sophisticated and specialized virus was used to either steal data, destroy computer drives and systems, and, ultimately [referring to the case of the Stuxnet virus which crippled Iran's rapidly-developing nuclear facilities] targeting and destroying or neutralizing physical facilities. Consider these as warnings of our dependencies and vulnerabilities to computer-run lives.

With major international cyberwarfare (nation against nation, or groups of nations against groups of other nations divided by ideology, ethnicity, level of economic development, availability of fuels and key resources, etc.) it is not a matter of possibility, or even of probability -- it is simply a matter of when it will happen, who will initiate it, and what (or whom) the target will be.

Society's greatest enemy is also its greatest protector - the expert computer hacker. And nations invested in cyberdefense are recruiting hackers into their governments and into their military forces. What an irony. A brief article in The New York Times follows:

September 26, 2012

Cyberwarfare Emerges From Shadows for Public Discussion by U.S. Officials

But the reticence is giving way. The chorus of official voices speaking
publicly about American cyberattack strategy and capabilities is
steadily growing, and some experts say greater openness will allow the
United States to stake out legal and ethical rules in the uncharted
territory of computer combat. Others fear that talking too boldly about
American plans could fuel a global computer arms race.

Next month the Pentagon’s research arm will host contractors who want to
propose “revolutionary technologies for understanding, planning and
managing cyberwarfare.” It is an ambitious program that the Defense
Advanced Research Projects Agency, or Darpa, calls Plan X, and the
public description talks about “understanding the cyber battlespace,”
quantifying “battle damage” and working in Darpa’s “cyberwar
laboratory.”

James A. Lewis, who studies cybersecurity at the Center for Strategic
and International Studies in Washington, says he sees the Plan X public
announcement as “a turning point” in a long debate over secrecy about
cyberwarfare. He said it was timely, given that public documents suggest
that at least 12 of the world’s 15 largest militaries are building
cyberwarfare programs.

“I see Plan X as operationalizing and routinizing cyberattack
capabilities,” Mr. Lewis said. “If we talk openly about offensive
nuclear capabilities and every other kind, why not cyber?”

Yet like drone aircraft,
which similarly can be used for both spying and combat, American
cyberattack tools now are passing through a zone of semisecrecy, no
longer denied but not fully discussed. President Obama has spoken
publicly twice about drones; he has yet to speak publicly on American
cyberattacks.

Last week, at a public Cyber Command legal conference, the State
Department’s top lawyer, Harold H. Koh — who gave the Obama
administration’s first public speech on targeted killing of terrorists
in 2010 — stated the administration’s position that the law of war,
including such principles as minimizing harm to civilians, applies to
cyberattacks.####

What are the implications for the near-term and the longer-term? The Global Futurist Blog examines them, and makes some trend-supported predictions:

1) CEOs, world leaders and the Elders of dynastic families will form strategic partnerships and alliances with skilled hackers;

2) An increased percentage of the budget of every business, government and dynastic family's income and assets will spent upon or invested in computer security;

3) The unspoken demand for hackers as either espionage participants of as security consultants will be greater (within the next 12 months) than the demand for any other type of professional or worker;

4) Government and quasi-government agencies (such as contractors) will be conducting limited cyber attack exercises on innocent civilians domiciled in their own countries and in foreign countries. There will be colossal collateral damage and a great deal of lying and whitewashing in order to cover it up by those responsible for giving the orders;

5) While true Artificial Intelligence is something that will be developed in the more distant future, a great deal of the world military's technological focus will be on combining computer science with robotics and weaponry.

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Tuesday, September 18, 2012

The lines are drawn, and will be etched more deeply in the sand between the larger, well-established and cash flow positive (even if this cash flow comes from subsidies or debt) conglomerated industrial and financial juggernauts and the entrepreneurial and emerging enterprises in terms of 1) aversion to risk or change, and 2) early adopters of technological and ideological "mini-paradigm" shifts. In a futurescape of continued disruption, business failures and government impotence, smaller and smarter are the winning attributes

During the next 18 to 30 months, the divide between the corporate establishment and the innovative and aggressive entrepreneurial constituents of the supply side [ both in the services sector and in the manufacturing and production sectors] of the world's national economies will widen. With the advent of crowdfunding and other alternative capitalization mechanisms, and with a public wanting to see a disruptive change in the way the wasteful and abusive (perceptually) entrenched oligopolies and monopolies, the larger, publicly-traded institutions run by avaricious boards of directors accustomed to a wealth-padded lifestyle, most all significant advances will be made by the smaller, less risk averse firms.

Big firms with ticker symbols are due to flounder quite a bit, regardless of market share and preferential governmental treatment due to several key factors

This is a function of a number of factors, not the least of which is a basic business law (as yet to be endorsed by the risk management and trend-watching pundits and the companies which employ them -

1) Castle's Second Law Of Practical Risk Management: Entrepreneurs, Strategic Planners and Project Managers, as well as their affiliated experts and teams should note that in many cases, the same given risk factors weigh much more heavily (either in fact or perceptually) against the benefit factors in a larger, more 'multi-cellular' organization than in its smaller, less-evolved counterpart.

2) Inertia and subsidies foster perpetuation of existing policies and even encourage them. Governmental agencies, central banks and barriers to the cost of entry by potential competition have encouraged their boards to continue what they have been doing. The U.S. government, for example, have kept some major enterprises alive in a money-printing, taxpayer-squeezing "Jurassic Park." These dinosaur companies still roam the earth because they have not been hit by a meteor shower of disruption and an interruption in their allowances;

3) Smaller enterprises can pivot while their larger, older counterparts are more like closed-minded, over-confident Goliaths. These companies would be felled by a single round from a slingshot fired by a crowdfunded or incubated "David." Muscularity and size do not necessarily triumph over speed and agility. Smaller firms are more receptive to new ideas, keeping them agile.

4) Traditional funding sources are drying up for these big behemoths as the tax base in industrialized nations begins to disintegrate due to a combination of unemployment and brain drain, while non-bank alternatives, international co-ventures, and public capital (in small increments and donations) are helping the smaller, harder-working enterprises to bring their products and services to market;

5) Many of these larger firms will either wage war against each other, or be bought out as bargains by Asian entrepreneurs and investment groups while the emerging enterprises are beginning to take flight. And more and more launches of smaller companies will take flight with the help of incremental, non-institutional investments by the general public through non-trade-able financings. Smaller private companies can take actions without the fear that a small failure, or some non-profitable time consumed in an exercise of trial and error will hurt their stock value. They are more interested in revenue growth and profit margins than in what the financial analysts and rating services have to say.

The populaces of the respective industrialized nations want to see more jobs, and they are starting to become increasingly excited about slaying the Goliaths and in financing David's techno slingshot or magic bullet.

As capital access to the entrepreneurial and emerging enterprise sector becomes increasingly liberalized, the only way that the juggernauts of the sad past will be able to get ahead will be through the rapid acquisition of these smaller companies and the separation of these industrious engines of employment from the corporate culture of the dinosaurs -- particularly the ones who are in a waiting pattern, or are standing in a plush version of a government assistance breadline with velvet ropes to keep these creatures from pushing each other out of the line.

The only interesting stock plays remaining for listed firms are the ones about to receive government aid, pricey consulting or military contracts, or the ones which are widely traded publicly but have seen the wisdom of an acquisition binge. It held Bill Gates' organization together for quite some time, now, didn't it?

Thursday, September 6, 2012

When the Capital and Securities Markets rally, as they did today, based upon news regarding a sovereign's (or several sovereigns', as in the ECB, for example) planned or approved issuance of debt to combat an economic crisis, it clearly signals that the movers and shakers of the world's economies and central banking systems have forgotten that a hyper extension of credit is precisely what pushed the entire world into a still-unresolved economic crisis.

While I am told that the public's memory is short, and that in a crisis "hope springs eternal," I think that the most important interpretation of events to be gathered from this unsupported market elation is that we, as a global society, have become addicted to debt, and to the false notion that debt (with or without underlying productivity) automatically fuels economic growth.

It does not. It never has. It never will.

The ebullience in the article extract which follows from the esteemed New York Times should frighten anyone who understands the true cost of debt in the longer term. We are putting flimsy bandages on gangrene and ignoring the root cause of the condition, leaving it untreated and to worsen. We are a world of debt addicts, mortgaging any asset, existing or as yet uncreated, in order to buy more without earning more.

It is axiomatic to any economist: Consumption cannot be sustained without production. And Employment is created by opportunities to produce - not by decorations of devalued and unsupported debt.

We are, in practical terms, paying for our current necessities with credit cards. After you've read this upbeat article, I will give you The Global Futurist Blog's assessment of a near-term and a longer-term scenario.

Yes, folks. I'm willing to offer some prospective and highly likely futurescapes. Douglas E. Castle only goes this far out on a limb when he knows that he is highly likely to be correct in his prognostication.

The markets have greeted several previous efforts to solve Europe’s economic woes with euphoria, only to be quickly deflated. While investors were bracing for the latest plan to run into problems, there were numerous signals that this plan may have staying power.

Here is what I see. The trend is frightening. In effect, we are incurring more and more debt with less and less production (income) with which to service (pay) it. Observe:

If we were to extend this chart to include 2011, 2012 and projections for 2013, you would see a further spiking in the ratio until the graph looked like it was bound heavenward. We are drowning in debt in the US, and the rest of the world is following our misguided example.

Central banks are buying back debt at inflated prices in order to prop up its paper value, and then they are issuing subsequent rounds of debt with which to pay the interest and principal on the debt that they have absorbed.

A real-world market cannot be cured by manipulation. A Ponzi Scheme of pyramiding indebtedness eventually runs out of places to go for more money... and like a chapter out of the Book Of Madoff, the issuers of the money ask to be repaid. Without increased production, employment and income, we are building a palace of paper. Someone will drop a match sooner or later.

Predictions

1) Within the next 18 to 24 months the US will experience the deepest depression it has felt since 1929;

2) Within the next 20 to 36 months, the industrialized nations of the world will follow suit;

3) During the above time frames (superimposed), the businesses of banking and investment banking will be separated in a return to the reasoning behind Glass - Steagall;

4) Non-Asian unemployment and underemployment will skyrocket;

5) The capital markets will be stalled, and the only investment opportunities will be those that offer direct participation and cashflow ["cash-on-cash returns"];

6) Violence and wars will escalate to a greater extent than ever in modern history. Militant and militia groups will be in a state of war against their own national governments. Government offices, tax bureaus, banks and other institutions which are unpopular now will become the targets of domestic terrorism.